40th Congress,/) 
2d Session. ) 


i ‘rj i- y'tr'L' 




HOUSE OF REPRESENTATIVES. 


( Report 
) No. 50. 


SUTRO TUNNEL. 

p [To accompany bill H. Ii. No. 1J53. 


June 3, 1868.—Ordered to be printed. 



Mr. D. R. Ashley, from the Committee on Mines and Mining, submitted the 

following 


REPORT. 


The Cominittcc on Mines and Mining, to ichom was referred a memorial of the 

Nevada legislature , “ asking aid in the construction of Sutro tunnel ,” after 

careful consideration , have 'prepared the accompanying hill and recommend its 

passage . 

This bill provides for the loan of government credit to assist in the construc¬ 
tion of a mining and draining tunnel to the Comstock lode, in the State of 
Nevada, upon which are located the most productive gold and silver mines 
known to modem times. 

The novelty of the proposed legislation, the principles involved, the import¬ 
ance of the interests affected, and their intimate relation to the financial ques¬ 
tions of the day have induced your committee to devote much time to the inves¬ 
tigation of the subject, the result of which is a thorough conviction on their part 
that the proposed legislation is wise, judicious, and to the best interests of the 
country. 

Tho first question which presents itself to our consideration is, what benefit 
does the nation at large derive from the production of gold and siver ? 

Gold and silver have, since time immemorial, been the standards of value 
among all civilized nations. Nature, which has distributed them in limited 
quantities over different portions of the globe, has made their production so diffi¬ 
cult and has so surrounded it by obstacles, that it must always remain compara¬ 
tively limited. 

These are and will always remain the true representatives of value; we may 
for a time, compelled by necessity or for the sake of convenience, issue paper 
representing so much gold and silver, but the value of that papier money is 
regulated by the ability of the nation to redeem it at some time at its par value 
in gold and silver. 

If a sufficient quantity of the latter is at or may be brought to the command 
of the national treasury, paper will be worth as much as gold and silver; if 
there is a certain degree of doubt in that ability, paper money will be at a dis¬ 
count in precisely that proportion as that doubt be great or small. 

A nation, therefore, in order to protect the value of its paper issues, requires 
the precious metals, or an ability of acquiring them; whether this be accom¬ 
plished by such a regulation of commerce as will bring the balance of trade in 
our favor, or, in other words, the influx of gold and silver from other countries, 
or whether we acquire the same by the production of our mines, does not mate¬ 
rially affect that result. 

It has been said the increased production and export of agricultural products 
and other commodities are most beneficial to the nation, for, besides counting as 

/ (sdr$?> 


Monograph 












'2 


SUTRO TUNNEL. 


so much money in our favor, their production leaves a profit to the producers, 
■enriching the nation to that extent. 

The gold and silver dug from the earth, on the contrary, as has often been 
asserted, costs more than its value, and there is consequently a loss in the 
operation; this has been given as a reason why the pursuit of mining results 
in no benefit to the country. 

Such reasoning, however, is fallacious; for the miner may, individually, be 
the loser in expending one dollar or more in digging another dollar from the 
earth, but the results of his labors are that he leaves two dollars for the benefit 
of the world.* The dollar expended by the farmer simply changes from one 
person to another; the wheat is consumed, and the same dollar only remains 
which existed before. The product of the miner serves a double purpose. In 
the first place it answers as an article of export, if the balance of trade requires 
it, thus paying for the commodities of other countries, and in that regard equals 
wheat or any other product. In the second place—and this is its most import¬ 
ant function—every dollar produced by the miner helps to increase the volume 
of the precious metals of the world, by that means exercising a most beneficial 
influence upon the general welfare of the nation, and particularly upon the pay¬ 
ment of the national debt. 

To explain this operation we quote from the able report of the Nevada legis¬ 
lature, as follows : 


DEPRECIATION IN THE VALUE OF MONEY. 

The world’s stock of coin in the year 1848 was, in round numbers, eighteen hundred mil¬ 
lions of dollars ; to this has been added to the present time an equal amount, of which the 
United States have furnished, according to Secretary McCulloch’s late report, eleven hun¬ 
dred millions. Allowing two thousand millions as the natural increase of taxable property 
by the growth of the country, we still find that the same has doubled in the United States 
within the period named. From seven thousand millions it has increased to sixteen thou¬ 
sand millions. This result is due to an increase in value of all property and commodities, 
caused by the depreciation in value of the precious metals. Thus the same article that could 
have been bought 18 years ago for one silver dollar, now requires two; or, in other words, 
two silver - dollars at the present time only have the intrinsic value of what one then had. 

DIFFERENCE BETWEEN THE PRECIOUS METALS AND OTHER COMMODITIES. 

*» 9 

It must be borne in mind that there is a vast difference between the production of gold and 
silver and all other commodities. Most of the latter are articles of consumption; they are 
useful for a special purpose, in the application of which they are consumed, disappear, and 
cease to exist. The farmer who produces wheat to the value of $1,000, and the miner who 
digs out gold to that amount, may derive an equal profit from their different pursuits; and 
hence one stands on an equality with the other, so far as individual gain or the interest of 
a particular locality is concerned; yet wheat is ground into flour, made into bread and con¬ 
sumed, while the gold dug out by the miner finds its way into the channels of trade, is trans¬ 
ferred from one nation to another, as the balance of trade may require, and forms a perma¬ 
nent addition to the stock of the precious metals of the icorld. 

INCREASE IN QUANTITY OF THE PRECIOUS METALS. 

At the time of the discovery of America in 1492, the stock of the precious metals in Europe 
was estimated at $170,000,000. In the year 1600, it had increased to $650,000,000—a gain 
of nearly four fold. 

That extraordinary addition to the precious metals in a little more than 100 years had a 
corresponding effect. Gold and silver became cheaper in the same ratio as their quantity 
had increased. It required four times the amount to buy any commodity—that is to say, all 
commodities increased in price four fold. The same increase in prices can be traced dis¬ 
tinctly to the present day, as the stock of the precious metals gradually increased, while 
making due allowance for all other causes which exercised a bearing in that directiop, such 
as the increase of commerce, the growth of population, facilities for intercourse between dif¬ 
ferent nations, &e. &e. 


APPRECIATION IN VALUE OF PROPERTY. 

The conclusion we arrive at, by carefully examining into this subject, which is clear and 
positive, is that the increase in quantity of the precious metals depreciates their value in 
precisely the same proportion as it appreciates the value of all kinds of property. Or, in 


SUTRO TUNNEL. 



3 


other words, the percentage added to the stock of the precious metals in circulation, adds the 
^ same percentage to the money value of all property in the world. 

Francis Bowen, the best American authority on political economy, expresses this view in 
the following words: 

“The general principle is, that the value of money falls in precisely the same ratio in 
which its quantity is increased. If the whole money in circulation should be doubled, prices 
would be doubled; if it was only increased one-fourth, prices would rise one-fourth.” 

The same principle is laid down by John Stuart Mill, well known as the highest modern 
authority in England. He says : 

“It is to be remarked that this ratio would be precisely that in which the quantity of 
money had been increased. If the whole money in circulation was doubled, prices would 
be doubled ; if it was only increased one-fourth, prices would increase one-fourth.” 


INCREASE OF TAXABLE PROPERTY IN THE WORLD. 


To illustrate the immense bearing this rise in prices exercises all over the world, we wil 
assume the following figures : 

Taking the taxable property of the whole civilized world at .$200,000,000,000, the amount 
of money in existence at $3,600,000,000, the addition of $900,000,000 would depreciate the 
precious metals 25 per cent., and, in consequence, it would require $250,000,000,000 to pur¬ 
chase all the taxable property of the world. The addition of $900,000,000 in rnouey, there¬ 
fore, would have the effect of producing $50,000,000,000 in the increased value of property. 
Every addition of $100,000,000 has its corresponding influence on the increased value of all 
property ; it adds over $5,000,000,000 to the property of the world. This increase of value may 
not be perceptible from year to year ; the aggregate result, however, after a number of years, 
is inevitable. Bowen refers to this as follows : 

“There may be brief and violent fluctuations in the relative value of particular com¬ 
modities, while the great movement is steadily going on which slowly changes the value 
of all.” 


IT DOES NOT AFFECT INDIVIDUALS. 

» 

This increase in value, however, does not materially affect individuals ; for when the cost 
of living increases, the rates of wages do also; but it acts as a stimulus to enterprise , and 
thus creates general prosperity. 

Hume long ago remarked that “in every kingdom into which money begins to flow in 
greater abundance than formerly, everything takes a new face; labor and industry gain life ; 
the merchant becomes more enterprising; the manufacturer more diligent and skilful; and 
even the farmer follows his plough with greater alacrity and attention. But when gold 
and silver are diminishing, the workman has not the same employment from the manufac¬ 
turer and merchant, though he pays the same price for everything in the market; the farmer 
cannot dispose of his corn and cattle, though he must pay the same rent to his landlord. 
The poverty, beggary, and sloth that must ensue are easily foreseen.” 

Even so cautious and conservative a writer as the distinguished English political econo¬ 
mist, McCulloch, fully admits the truth of this view, though he adds the just qualification 
that the fall in money must proceed from natural eauses. 

William Jacob, in his valuable treatise on the precious metals, remarks: 

“ The world is very little really richer or poorer from the portion of metallic wealth that 
may be distributed over its surface. The whole mass of material wealth is neither diminished 
nor increased by any change in the relative weight of gold and silver to the usual measures 
of other commodities. The only benefit to the world in general from the increase of those 
metals is that it acts as a stimulus to industry by that general rise of money prices which it 
exhibits to the view. It matters little to him who raises a bushel of wheat whether it is 
exchanged for a pennyweight or an ounce of silver, provided it will procure for him the 
same quantity of cloth, shoes, liquors, furniture, or other necessaries which may be desira¬ 
ble to him.” 

IT MATERIALLY AFFECTS A DEBT. 

But when a debt already exists, being a fixed number of dollars, the decrease of value of 
each dollar reduces the debt in the same proportion. The immortal and much-lamented Lin¬ 
coln thoroughly understood this question, when, in his annual message of 1862, he made use 
of the following language : 

“ The immense mineral resources of some of those Territories ought to be developed as 
rapidly as possible. Every step in that direction would have a tendency to improve the 
resources of the government and diminish the burdens of the people. It is worthy of your 
serious consideration whether some extraordinary measures to promote that end cannot be 
adopted .” 

That wise and good man had carefully studied the effect which was then strongly felt in 
Europe, and which is alluded to by Alison, the English historian, as follows : 


4 


SUTRO TUNNEL. 


BENEFICIAL INFLUENCE IN GREAT BRITAIN. 

“ It will belong to a succeeding historian to narrate the wonderful spring which this 
country (England) made during the five years which followed 1852, under the influence of 
the gold discoveries in America and Australia. The annual supply of gold and silver for 
the use of the world was, by these discoveries, suddenly increased from an average of ten 
millions to thirty-five million pounds sterling. Most of all did Great Britain and Ireland 
experience the wonderful effects of this great addition to the circulating medium of the globe. 
Prices rapidly rose, wages advanced in a similar proportion, exports and imports enormously 
increased, while crime and misery rapidly diminished. Wheat rose from 45 to 65 shillings, 
but the wages of labor of every kind advanced in nearly as great a proportion ; they were 
found to be about 30 per cent, higher than they had been five years before. In Ireland, the 
change was still greater, and probably unequalled in so short a time in the annals of history. 
The effect of the immense addition to the currency of the world, to the industry of all nations, 
and in an especial manner of the British Isles, has been prodigious. It has raised our exports 
from £58,000,000 in 1851 to £97,000,000 in 1854, £95,000,000 in 1855, and £115,000,000 
in 1856; and augmented our imports from £157,000,000 in the former to £172,000,000 in 
the latter year.” 

* • 

PROSPERITY OF THE UNITED STATES. 

Thus, the influence of the increased metallic currency saved Great Britain from bank¬ 
ruptcy ; and while its mysterious agency was working these wonders in Europe, it exer¬ 
cised a similar bearing in this country. Some years before the rebellion, this country had 
commenced to prosper; and when that deplorable event began, our resources were just 
expanding under the beneficial influence of the increased metallic wealth. Had it not been 
for the constant and continuous flow from California, which increased the resources many 
fold, when they were most needed, the difficulties of providing the requisite means to carry 
on the war would have been so great that the disruption of the Union might have been the 
result. It has been the wonder and marvel of all Europe how the United States carried on 
that gigantic war for four years, kept one million of men in the field, contracted during that 
brief space of time a national debt of nearly $3,000,000,000, and came out in a more flour¬ 
ishing and prosperous condition than when engaged in it. The explanation of this wonderful 
phenomenon is simple —the magic agency of gold wrought it. 

THE NATIONAL DEBT. 

The issuance of a depreciated paper currency during the war has had the effect, as con¬ 
fidence became restored, and as its metallic value increased, of enriching the population at 
large who held that currency, enabling them to pay off their private debts, while the gov¬ 
ernment, issuing at one time as much as three paper dollars, which only had the value of 
one metallic dollar, became proportionally more in debt. The result, therefore, has been, 
that the individual debts of the American people have, to a large extent, been transferred to 
the government, increasing the same to an enormous extent, and amounting to-day to 
$2,500,000,000. That debt is a burden on $16,000,000,000 of taxable property; if we increase 
the latter, we virtually reduce the former. 

INCREASE OF TAXABLE PROPERTY IN THE UNITED STATES. 

The amount of the precious metals at present in circulation throughout the world, amounts 
to $3,600,000,000. The proposed tunnel to the Comstock lode will, within thirty years, 
add $900,000,000 to the same, or 25 per cent. It will consequently add 25 per cent, to the 
taxable property of the United States, equal to $4,000,000,000, which, at the rate of taxation 
of two per cent., will give an annual increase to the resources of this government of $40,000,000 
for each of the first thirty years, and $80,000,000 for each year thereafter. 


INCREASE OF REVENUE. 


The proposed work adds each year $30,000,000 to the stock of the precious metals, equal 
to the one hundred and twentieth part of the $3,600,000,000 in existence. It therefore adds 
♦be one hundred and twentieth part to the $16,000,000,000 of taxable property in the United 
' equal to an annual increase of $133,333,333. That addition, made from year to year, 
’ "'ve stated result, as will be seen by the following table: 



'•'•case of taxable property. 

. $133,333,333 at two 

. 266,666,666 “ 

. 400,000,000 “ 

. 800,000.000 “ 

. 1,600,000,000 “ 

. 2 , 000 , 000,000 “ 

.. 3,200,000,000 “ 

. 4,000,000,000 “ 


Increase of revenue. 
per cent. = $2,666,666 
“ 5,333,333 

“ 8,000,000 

“ 16,000,000 

“ 32,000,000 

“ 40,000,000 

“ 64,000,000 

“ 80,000,000 










SUTRO TUNNEL. 


5 


PAYMENT OF THE NATIONAL DEBT. 

If this annual increase in revenue he set apart for the purpose , it rcill pay off the whole national 
debt in forty-six years. 

When Francis Bowen wrote his “Principles of Political Economy,” we had no national 
debt. In referring to that of Great Britain, he says : 

“As the depreciation goes on, taxation may be extended pari passu without throwing any 
additional burden upon the community ; and a sinking fund formed out of the surplus thus 
obtained would pay off the national debt in less than one generation. Our national debt, it 
is true, is but small, and what little there is, will quickly be extinguished. But the debts of 
the individual States are large, amounting in the aggregate to over $200,000,000, a large 
portion of which is owned in Europe. It is, therefore, satisfactory to remember that as the 
monetary revolution will operate exclusively to the benefit of the indebted party, our own 
land will derive as much benefit from it, in proportion to our means, as any other country on 
earth.” 

SIR ROBERT PEEL. 

The effect of the increase of bullion on taxable property and a national debt has been 
long recognized by the financiers and statesmen of Great Britain, and was enunciated in the 
following language, held by Sir Robert Peel, in 1844 : 

“ There is no contract, public or private, no engagement, national or individual, which is 
not affected by it. The enterprises of commerce, the profits of trade, the arrangements made 
in all domestic relations of society, the wages of labor, pecuniary transactions of the highest 
amount and the lowest, the payment of the national debt, the provision for the national 
expenditure, the command which the coin of the smallest denomination has over the necessi¬ 
ties of life, are all affected by it.” 


M. CHEVALIER. 

M. Chevalier, the well-known French writer on political economy, in his treatise on 
“The Probable Fall in the Value of Gold,” published in 1859, says: “ Owing to the 
discovery of the new gold mines, a time will arrive when a change will come over the British 
treasury as if some genii, an enemy of its creditors, had spirited away their dividend warrants, 
and substituted others of only half their value. Not that the number of pounds sterling, due 
to them as principal, and of which the interest is counted to them every six months, will be 
diminished—not that the quantity of gold contained in the pound sterling will be lessened ; 
but the British treasury will henceforth draw from the tax-payers each pound sterling, with 
as little difficulty to them as it previously took to pay a half sovereign.” 

That the increase of the stock of the precious metals quietly but surely works 
a revolution in the value of all property in the world appears convincing, and 
is shown conclusively by the foregoing extract. 

If, then, by their production, we can increase the value of the taxable property 
in the country, thereby enabling us to relieve the burdens of the people by 
reducing taxation, and still collect the same amount of revenue, we would be 
unwise indeed were we to neglect and allow to go to ruin an interest which 
can, with a little fostering care and appropriate legislation, be made to spread its 
blessings throughout our country. 

That some legislation is required to stimulate our mining interests the investiga¬ 
tions of your committee have clearly established for the production of the precious 
metals is decreasing, while the vast extent and value of our mineral regions is 
being demonstrated more conclusively from year to year. 

The views expressed in the introductory to a book on our mineral resources, 
lately published by Adolph Sutro, are worthy of our serious consideration. 
Mr. Sutro says : 

The development of the mineral resources of this country forms a Subject of such grave 
importance, one involving considerations of a politico-economical nature of such significant 
consequences, that it well behooves the American statesman, the patriot who has the future 
of this great republic at heart, to devote some time to the earnest examination of those ques¬ 
tions which have a vital bearing upon the future welfare of this country. 

In the vast regions stretching from the Mississippi river to the broad Pacific ocean, from 
the confines of Mexico to the icy regions of the north, there lie buried in the bowels of the 
earth incalculable treasures of the precious metals, which but await the industrious applica¬ 
tion of the hardy miner and the fostering care of a provident government to pour out a 
stream of gold and silver, which will so much increase the national wealth, augment the 
resources of the nation, and spread welfare and prosperity throughout the extent of this vast 


6 


SUTRO TUNNEL. 


land, that the burdens of taxation will gradually disappear, and make the national debt sink 
into insignificance. 

If we contemplate that mighty interest, which cau be made to create so many blessings, 
and find that it is neglected and declining from year to year, we must arrive at the firm con¬ 
clusion that there is something radically wrong in our present system of mining, and that 
an immediate, practical, and effectual remedy should be applied to rescue from steady decline 
and eventual abandonment a source of wealth which must be considered the most fruitful and 
important one this nation possesses. 

If the facts presented in the following pages arc carefully examined, three prominent con¬ 
clusions will be arrived at: 

1st. That the main wealth of the mineral regions is contained in quartz lodes, the princi¬ 
pal treasures of which are found at great depths beneath the surface. 

2d. That, the present mode of mining downwards from the surface is detrimental to the 
prosperity of the mining interests. 

3d. That a system of deep tunnelling should be inaugurated, which will make mining 
profitable by giving a natural outlet to the flow of water, by ventilating the mines, by 
cooling the atmosphere, and by facilitating the extraction of ore. 

Mining requires capital, which the western regions do not possess; the eastern States 
have an abundance, but not for investment in mining enterprises, which are looked upon 
with suspicion, and are almost considered disreputable. 

Some years ago many persons were found quite willing to embark in mining ventures, and 
considerable sums were invested ; but the experiences made have been disastrous and ruin¬ 
ous to those concerned, in almost every instance. This result has been charged to various 
causes, but the true one must be sought in the unwise, extravagant and wasteful manner in 
which the work on the mines has been performed. 

The construction of deep tunnels, which by all authorities are admitted to be absolutely 
necessary to make mining operations successful, requires time, and the outlay of large 
amounts of capital, and consequently implicit confidence in the permanency of the mines. 

It is the lack of confidence in the permanency of the mines, (their downward extent to great 
depth not having practically been demonstrated in the United States) which prevents the 
execution of such works. 

The Comstock lode, the most productive of all mineral lodes in the world, producing as 
much silver as the whole republic of Mexico, presents the most extraordinary example, 
illustrating the ruinous and wasteful manner of our present system of mining. We have a 
lode here which has produced within the last six years over $75,000,000, and the whole of 
that enormous sum has been swallowed up by the expenses of producing it! The mines 
upon this lode have now reached such a depth that, after a few years, they must inevitably 
be abandoned, provided a deep tunnel be not constructed. 

Great mineral lodes, true fissure veins, according to experiences made in older countries, 
extend downward indefinitely; we have the testimony of some of the first scientific men 
living, that the Comstock lode bears the strongest evidences of being a true fissure vein. 

Here then we haVe a remarkable state of affairs; a lode yielding $16,000,000 per annum, 
almost the whole amount being absorbed by the expenses of producing it, while the construc¬ 
tion of a deep tunnel, for which extraordinary facilities exist, would leave a large portion of 
that amount as a profit; the downward continuance of the lode is theoretically, at the same 
time conclusively, proven, and still we find that capitalists cannot be found to undertake the 
construction of a deep tunnel, because the ores at great depth are not actually visible. 

Were that tunnel completed to-day, a glorious reality, pouring out a silver stream of 40 or 
50 millions per annum, these same capitalists, who first want to eye the riches way down 
in the earth before they consent to invest, would be eager to enter into similar undertakings 
in all parts of the mining regions, and tunnelling would become the order of the day. The 
nation would be enriched beyond all expectation, and the benefits to the government and the peo¬ 
ple would be incalculable. 

That it is both the duty and the interest of the government, to aid in the construction of one such 
tunnel to serve as an index work, and thereby establish the continuance of mineral lodes in depth, 
cannot admit of any doubt. 

The most favorable opportunity for such a demonstration presents itself in the construction 
of the proposed tunnel to the Comstock lode; the government may consistently extend its credit 
to that work, for almost no risk is involved, the security offered being a hundredfold: a simple 
investigation of the subject will prove this conclusively, 

Some 30 years ago, a similar question arose in Saxony, when Baron von Herder, then chief 
of the mining department, as an introductory to a book on the subject, addressed his country¬ 
men in the following words :* 

“ To the friends of their country do I dedicate the plan of a mining work, the execution of 
which is of the highest importance to the mining interests of Saxony. 

“It is the plan to drive a deep tunnel from the level of the Elbe, near Meissen, to the 
neighborhood of Freiberg, in order to drain the water from the mines of that district to a much 
greater depth than heretofore, and by means thereof to secure their existence for centuries to 


* The Deep Meissen Tunnel, by Sigmund August Wolfgang, Baron von Herder. Leipzig, 1838. 





SUTRO TUNNEL. 


r 


come , a plan which as to magnitude, time, and cost, is larg’e and gigantic, but which appears' 
in its effects and results so benevolent and full of blessings, that the question as to cost should 
not form an obstacle to its execution. 

“ It is true that the resources of the mining treasury of the Freiberg district are too limited 
to bear these expenses ;* but the execution of a ivork which in times to come will be classed in 
the list of those great national monuments which have for their object the lasting welfare of a 
country , and which will secure the same for the latest generations and times , cannot be left to 
the mercy of a single ruining district , but should be looked upon as a work creating happiness 
and glory , and worthy of the participation and promotion of the entire nation. 

“ With unlimited confidence do I therefore present to the friends of their country the fol¬ 
lowing explanation and statement of this project. 

“ May they extend to it a wise and sympathizing examination and magnanimous considera¬ 
tion, and may they be assured of the fervant thanks , which posterity will grant them 

The mines of Saxony produced, and now produce but a mite of what our mines do ; the 
national debt of that country is but small, and the burdens of taxation are not of an onerous 
character. 

Hoio much stronger then should the argument be in the case at issue! A country containing 
more mines and richer mines than all the balance of the world combined; a country having a 
national debt amounting to over $2,500,000,000, and a people crying out and groaning under 
unequalled burdens of taxation ! 

Wisdom and foresight point out but one course: let the mineral resources of the country 
go to ruin, and the national debt, the burdens of taxation, and general suffering will be 
increased from year to year. 

Let our immense mineral resources be developed, an increase in the value of all property, 
a relief of the burdens of taxation, unparalleled advancement of commerce, industry, and 
traffic, a bright future, speedy resumption of specie payments, and general welfare and pros¬ 
perity, will be the results. 

Those who rule the destinies of this country have the solution of this question in their 
hands; wisdom, foresight, liberality, and true patriotism will grasp the issue, and promptly 
secure those results which will immensely benefit our present generation, and extend its 
blessings to posterity. 

Your committee considers the execution of one great mining work, such as 
the proposed tunnel to the Comstock lode, as conducive to the most beneficial 
results; it would practically demonstrate the continuance of mineral lodes in 
depth, thereby establishing confidence in the execution of similar works in all 
the mining districts. 

Writers on mining agree on the importance of general drain tunnels, and the 
best proof of their utility is shown by the fact that in those mining districts 
where a general and extensive system of drainage by tunnels has been adopted, 
the mines have been kept in a flourishing condition during hundreds of years, 
while in those places where no tunnels have been made, mining operations have 
proved unprofitable, and the mines have been abandoned. 

We find in all mining codes provisions for the construction of tunnels; they 
were, in olden times, called the “keys of the mountains,” and under the laws of 
Spain, Belgium, Prussia, Austria, Hungary, Saxony, Hanover, and other coun¬ 
tries, compulsory payments, towards the support of drain tunnels, were exacted 
from the mine owners, in order to keep up the mining districts. 

Gamboa, the great expounder of Spanish mining law, in speaking of the 
neglect of the justices to* enforce the construction of tunnels, says : 

By indulging in this neglect of their duty they do injustice to the public, to individuals, 
and to the rights of the sovereign, who has made it a law, that the working of the mines 
shall be assisted by means of tunnels, as being works of great importance, and necessary for 
giving a permanent character to this valuable description of property. 

General drain tunnels are important in many regards ; they not only provide 
the cheapest and safest means of drainage, ventilation, extraction and discovery 
of ore, but they accomplish the great and very important result of consolidating 
the different interests in a mining district, by establishing one general base of 
operations. 

As mines are worked now, the proprietors, or companies, on a mineral lode— 
no matter how limited the extent of their claims—each, independently of their 
neighbors, erect a steam-engine, pump the water from their mine, hoist the ore, 
and transport it to the reduction works; they boast of independent organiza- 


8 


SUTRO TUNNEL 


tions, presidents, boards of trustees, superintendents, secretaries, &c., &c., kept 
up at an enormous expense, which makes mining unprofitable and a losing 
business. 

In large cities we find it necessary to establish a joint system of drainage, 
gas and water-works; main sewers are constructed, into which small branches 
enter from every building; supposing each house-owner were to provide his 
own drainage, independent of his neighbors, establish his own gas manufactory, 
and dig a canal of his own from a distant spring in order to get a supply of 
water, the world would pronounce such proceeding very unwise and foolish. 

And still we find a similar state of affairs in our great mineral districts; a 
contiguous row of mines on the same lode, each worked independently and 
entirely regardless of its neighbors, while one general tunnel, or adit, or drain 
would allow the water to run off by its natural flow to the lowest level, from 
all the mines, through one common outlet, thereby abolishing at once all pump¬ 
ing machinery, giving one common railroad for the transportation of all the ore, 
and creating innumerable advantages. Only one general mining administration 
would be required, operations could be carried on jointly and systematically, 
the extraction of ore largely increased, the health of the miners secured by- 
good ventilation, and large sums of money would be saved, thereby making it 
possible to extract immense bodies of low-grade ores. 

In short, instead of an unwise, shortsighted, ruinous, and stupid manner of 
proceeding, we would inaugurate a rational system of mining, a system which 
would make it profitable, attract the capital which is absolutely necessary for 
the development of this branch of industry, increase the production of the 
precious metals beyond all expectations, populate the vast extent of our mineral 
regions, procure traffic for our trans-continental railways, stimulate the commerce 
and industry of the whole nation, firmly establish our credit by proving the 
extent of our mineral wealth, and, above all, relieve the burdens of taxation by 
increasing the value of all property. 

Such are some of the advantages which, in our opinion, would be derived 
from the adoption of a general system of tunnelling in our great mining districts, 
and it must appear remarkable that such tunnels, their advantages being so 
self-evident, have not already been constructed in numerous places. 

There are many causes, however, which prevent their construction, and we 
must look for these in the manner in which mining property is owned and acquired. 

The men who undergo all sorts of privations, hardships and dangers in the 
hazardous pursuit of prospectors, do so not for the purpose, after discovering a 
promising mine, of working it, establishing a home and deriving a legitimate 
income therefrom, but the great stimulus for their exertions is the prospect of 
rapidly realizing a fortune by selling the property thus discovered and acquired 
to some capitalists in the large cities of the eastern States. 

Few lodes show much valuable ore at the surface ; if such a one is discovered, 
the croppings of which give large assays, it generally causes much excitement 
among the miners, who, either ignorant of geology, or too apt to believe what 
they wish, imagine that the whole body of the lode, for its width, length, and 
to any depth, will prove of the same character. They go to work with a good 
will, sink shafts and inclines, but soon discover the fact, which is well known to 
all experienced at mining, that lodes are not continuously ore hearing , but only 
contain bunches or chimneys of good ore, while great masses of barren quartz 
or country rock, which intervene both horizontally and perpendicularly, neces¬ 
sitate a protracted search for ore, which is expensive and often proves a serious 
obstacle to financial success. 

Other difficulties interfere with the miner. If he is really fortunate enough 
to discover a valuable body of ore near the surface, there may be no mill in the 
district to reduce it ; or if there be a mill, the ore may be of so rebellious a 
character as to defy reduction to advantage. 


SUTilO TUNNEL. 


9 


He soon arrives at a depth where a steam pump is required, his means become 
exhausted, and the accumulating difficulties compel him either to lose all the 
fruits of his labors by abandoning the property, or to dispose of it to other 
parties who have a sufficiency of means. 

Self-interest and a desire to acquire the much coveted fortune, notwithstand¬ 
ing his own failure, induce him to pursue the latter course. He starts off for 
New York or Boston, well provided with specimens, certificates of assay, tran¬ 
script of record and general recommendations; he there exhibits his vouchers 
and proofs and proposes to dispose of the property to a joint stock company. 
The plausible reason given for selling so valuable a mine for so small a sum is 
that the means are wanting for the erection of steam pumps, hoisting and reduc¬ 
tion works, by the aid of which the ore and bullion to be realized would only be 
limited by the number of men employed and the crushing capacity of the mill. 

The miner, who now becomes an unscrupulous speculator, well recollects how 
easily he was deceived himself in regard to the continuous character of the ore 
contained in mineral lode§, and knows that persons who never have seen a 
mine could easily be led into the same error. 

The most adventurous and enterprising, those who want to make fortunes 
without much work, greedily swallow the miner’s stories, and are but too eager 
to enter into the scheme; they have not the remotest idea of following mining 
as a regular pursuit to be carried on legitimately and regularly, but they 
simply want to enter into a sort of outside speculation, to speedily make a 
fortune and then sell to somebody else. 

On the strength of these representations a company is formed of men of 
means totally ignorant of the subject, a superintendent is sent to the mine no 
better informed, a pumping engine and mill contracted for, and not until they 
are erected and in complete running condition, work on the mine itself is com¬ 
menced in order, as is supposed, to shovel or dig out the quantity of ore 
required for the daily supply of the mill. 

Now comes the disappointment. Notwithstanding the good assays, notwith¬ 
standing the substantial pumping engine, notwithstanding the mill constructed 
after the most approved plans, notwithstanding the well organized company 
with a full staff of officers, the whole affair proves a failure. 

Everything is there but a sufficient quantity of good ore, and nothing is left 
but to go deeper on the mine in 01 der to try and find it; and while this tedious 
and expensive process is going on the mill lies idle, the officers receive their 
salaries, and the pumping engine is kept going at a lively rate. Instead of 
remittances of silver bricks, more assessments are called for, and the unfortunate 
stockholder, after paying up for a year or more, becomes disgusted with his enter¬ 
prise and abandons the whole affair as a bad job. 

Here we have the whole secret how the lack of confidence in mining enter¬ 
prises has been brought about. The persons who made these investments did 
so on the strength of false representations made to them, that an immense 
fortune could rapidly be realized simply by the erection of a pumping and hoist¬ 
ing engine and a mill; and being disappointed in their calculations, they could 
not be induced to enter into any other enterprise connected with mining under 
any consideration whatever. 

Had these persons been told that, in order to properly open a mine, several 
hundred thousand dollars and several years of time would be required, they 
certainly would not have entered into the operation; this class of men are not 
willing to wait years for returns, and since a rational system of mining requires 
patience and the outlay of much capital, these are not the ones to engage in it. 

If a mine really proves valuable and rich ore is at once extracted from the 
same, it often falls into the hands of joint stock companies, whose object is not 
to work the mine fairly and legitimately, but who manage to make large fortunes, 
by shrouding the doings at the mine in mystery by only opening one gallery at 


10 


SUTRO TUNNEL. 


a time, and thus contrive to make its value appear either extravagantly high, 
or of hardly any value whatever. 

In the one case the price of shares is brought to the highest figures by 
employing as many men as will find room in the mine, taking out unusually 
large quantities of ore and making large dividends ; in the other case the mine 
is declared exhausted, all supplies of ore are withheld, assessments are levied, 
lawsuits against the mine are commenced, and thus the price of shares is unduly 
depressed. In the former case the managers, who form a ring which controls 
much capital, want to sell out at a large profit; in the latter case they want to 
buy in again and start out for a repetition of the operation. 

There is no doubt but that mining has, in these various ways, been brought 
into disrepute, and the public, gulled and swindled, not caring to investigate the 
true causes of their losses, declare mining ruinous and unprofitable in the high¬ 
est degree. No capital can any longer be found for the opening of mines, no 
matter how promising, and the result is a general depression in mining opera¬ 
tions. f 

The sooner the ownership of our mines passes from the hands of these spec¬ 
ulators into those of men who are willing to enter into mining as a legitimate 
pursuit to be followed for years, and as a permanent investment, the better it 
will be for the general interests of the country. 

In order to arrive at this result it is necessary to restore confidence in mining 
operations, which can only be accomplished by demonstrating that mining can 
be made a most lucrative, permanent and satisfactory occupation, that mineral 
lodes extend downward to any depth, and that nearly all the present difficulties 
may be overcome, provided all the smaller interests in a district are consolidated 
under one rational system. 

Deep drains and working tunnels have, by^ experience in Europe, been found 
to accomplish these results. They are necessary for the development of our 
immense mineral resources. But how are they to be constructed, requiring, as 
they do, millions of dollars and years of time, while no confidence exists in 
mining operations 

Your committee consider the successful construction of one such work as the 
means of restoring confidence in that important branch of industry, of indu¬ 
cing private capital thereafter to enter freely into like operations in other dis¬ 
tricts, thereby adding much to the wealth, population, commerce, and resources 
of the country, and building up, on a permanent basis, the vast empire stretch¬ 
ing from the Mississippi river to the Pacific oceau, whose only resources are its 
mineral wealth, and which will form the future great market for the agricultural 
products of the western and the manufactures of the eastern States. 

By far the most important and productive mining district in the United States 
is that which contains the Comstock lode, in the State of Nevada. The miners 
on that lode are laboring under the difficulties already indicated, and, for the 
want of a deep drain tunnel, are fast approaching abandonment. Extraordinary 
inducements present themselves for the execution of such a work at this place. 

Your committee have patiently and carefully investigated all the questions 
having any bearing upon the subject, and, without reporting at length the par¬ 
ticulars of the documents, evidences, and general information which have been 
examined, beg leave to submit the following general statement of facts and 
conclusions which have induced them to perfect the accompanying bill, and 
earnestly recommend its passage. 

SUMMARY OF FACTS AND CONCLUSIONS. 

1 . Gold and silver are the true standards of value ; paper representing so 
much money may be issued for convenience or from necessity, but its value 
is regulated by the ability of the nation at some time to exchange the same for 


SUTRO TUNNEL. 


11 


its par value in gold and silver. If there is a certain degree of doubt in that 
ability, it will be at a discount in precisely that proportion as that doubt be 
great or small. 

2. A given quantity of the precious metals exists throughout the world ; if 
that quantity is increased, their value depreciates in precisely the proportion 
(all things being equal) in which that increase takes place. 

3. The decrease in value of the precious metals manifests itself by the in¬ 
crease in value of all commodities, or, in other words, more of the precious metals 
are required to obtain any given commodity. 

4. By the increase in quantity of the precious metals and the consequent 
increase of taxable property, the same amount of revenue may be collected at 
a less rate of taxation. 

5. Where a large public debt exists, being a given number of dollars, the 
reduction of value of each dollar reduces the debt in the same proportion ; the 
burdens of the people in paying the interest, and eventually the debt itself, are 
lessened in the same degree. 

6. The public debt of the United States being large, and the mines of the 
precious metals almost unlimited, their development becomes a question of high 
importance to the country. 

7. Notwithstanding the discovery of new mines, and the increase in extent 
of our mineral resources, the production of the precious metals is decreasing 
from year to year. 

8. The spirit of speculation, the eagerness of making rapid fortunes, and the 
misrepresentations resorted to to induce persons to purchase mining claims, 
together with the failure of nearly all such enterprises, have, among capitalists, 
completely destroyed confidence in mining operations. 

9. The greatest part of treasure is furnished by mines, the value of which 
consists in an abundance of pay ore, not in its richness. The best paying and 
most productive gold mines are those which yield from one to two ounces of 
gold, or from two to three pounds of silver, in every two thousand pounds of 
ore. The large masses of material which have to be handled to obtain the 
precious metals make our present system of working and managing each mine 
separately unprofitable. 

10. General drain and working tunnels, by the aid of which all the mines of 
a mining district may be opened jointly and economically, are required ; their 
construction is prevented by the lack of confidence already indicated, and on 
account of general ignorance of the continuance of mineral lodes in depth. 

11. That true lodes are continuous in depth is practically proven by the 
works on European mines, which have been carried to a depth of over 2,500 
feet ; no authenticated instance is recorded of a true fissure vein having been 
found to terminate in depth. 

12. Theoretically, the continuance of mineral lodes in depth is proven by the 
well-established theory, generally accepted by scientific men, that true veins 
have been formed by fissures in the earth, filled by sublimation from the great 
laboratory below. 

13. That general drain tunnels are the means of increasing the yield of bul¬ 
lion and keeping up the mining districts, is shown by T the flourishing state in 
which the mines of Germany have been kept during centuries, w'hile nearly all 
the mining districts where no tunnels have been constructed have gone to 
decay. 

14. The governments of Europe recognizing the importance of drain tunnels, 
and appreciating the magnitude and difficulty of such works, have for centuries 
extended liberal aid and encouragement to their construction. 

15. The example of other countries, however, is not required to demonstrate 
the advantages of these tunnels ; ordinary judgment teaches that natural drain¬ 
age substituted for the never-ceasing labor of pumping, one general system of ex- 


12 


SUTRO TUNNEL. 

traction and transportation instead of numerous independent organizations, and 
a consolidation of all efforts instead of a division of forces, must prove more 
effective, economical, and fruitful of beneficial results. 

16. The construction of an extensive tunnel of this kind in one of our import¬ 
ant mining districts, brought into successful operation, would do much towards 
re-establishing confidence in this important branch of industry; it would practi¬ 
cally demonstrate the continuance of mineral lodes in depth, prove that mining 
operations can be made profitable and lasting, and that they offer a fine field 
for the investment of capital. 

17. It is highly probable that the result would be the construction through 
private enterprise of many such tunnels in the different mining districts, the 
opening up of many mines which otherwise could not be opened and made 
profitable, a consequent increase in the production of the precious metals, and 
the placing of our mining operations on a permanent and solid basis. 

18. The most valuable and productive mines in the United States are situated 
on the Comstock lode, in the State of Nevada; they have produced within 
the last six years over $S0,000,000 of gold and silver bullion, and their present 
annual yield exceeds $16,000,000. 

19. Notwithstanding this large yield, but little profit is derived from them ; 
the mines are entered by numerous shafts, upon which 47 steam-engines are 
kept in motion with fire-wood, costing $16 in gold per cord, the only fuel to be 
obtained in the neighborhood. 

20. These shafts have reached a depth of from 800 to 900 feet, and the con¬ 
stantly increasing expenses of working the mines, as greater depth is attained, 
make their abandonment inevitable, provided a deep tunnel be not constructed. 

21. The largest part of the taxable property in the State of Nevada is located 
within this district, which now presents a scene of life, industry, and happiness. 
The abandonment of the mines would bring ruin and desolation upon its inhab¬ 
itants, and make it relapse into an uninhabited wilderness. 

22. These mines are favorably located on the side of a mountain, 2,000 feet 
above the adjoining valley; a horizontal tunnel driven in from the foot-hills 
will drain them to that depth, will allow them to be worked 1,000 feet or more 
below the tunnel level, and will make mining operations thereon profitable for 
one hundred years to come. 

23. The facilities for opening the mines by numerous galleries after the com¬ 
pletion of the tunnel will be so great that the present production of $16,000,000 
may be made to exceed $50,000,000, or even reach $100,000,000 per annum. 
These results can only be reached after the completion of the tunnel to its inter¬ 
section with the Comstock lode, and will give such a stimulus and self-activity 
to the enterprise, as will concentrate all the energy, ingenuity, and skill which 
can be brought to bear, in order to rapidly complete the work. 

24. The future yield of these mines, by aid of the tunnel, is estimated by t he 
Nevada legislature at $1,000,000,000 ; the tunnel will traverse at right angles 
for four miles the country to the eastward of the Comstock lode, where numer¬ 
ous parallel lodes are known to exist which may yield an amount equal to that 
of the Comstock lode. 

25. The length of this tunnel will be about seven miles. It is a work diffi¬ 
cult and expensive, but entirely feasible. By' means of a shaft, with the mod¬ 
ern improvements in rock-drilling machinery and blasting material, it may be 
accomplished in three or four years. 

26. Exclusive privileges have been granted by the State of Nevada and 
by Congress to Adolph Sutro and his associates, and contracts have been 
entered into by the different mining companies from which an annual income 
will be derived exceeding $2,000,000. 

27. Notwithstanding the most brilliant prospects, the efforts to obtain the 
necessary funds for the construction of this tunnel have been unsuccessful. 


SUTRO TUNNEL. 


13 


The lack of confidence indicated above; the magnitude and difficulty of the 
enterprise ; and the fact that all the money invested would be lost should it be 
insufficient to complete the work, have prevented its success through private 
means. 

28. The favorable location of these mines for deep drainage by tunnelling ; 
their great yield heretofore ; the probability of their increased yield hereafter ; 
and the security which can be given, make this a peculiarly fit occasion for the 
extension of government aid in order to demonstrate the continuance of min¬ 
eral lodes in depth, and to inaugurate a rational system of mining. 

29. The total cost of the tunnel cannot be accurately given. From an exam¬ 
ination of the cost of numerous tunnels constructed in the United States, England, 
France, and Germany, it appears probable that its cost will be about $8,000,000. 

30. The issue of bonds to the amount of $5,000,000 by the government during 
the progress of the work, at the rate of $15,000 for every hundred feet completed 
and accepted, would secure the speedy construction of this important work. 

31. To secure the payment of these bonds a mortgage should be made to the 
government on the tunnel and everything appertaining thereto, and the total 
revenue , after its completion to the Comstock lode, set apart for their redemption. 

32. It is probable that none of these bonds need be paid by the govern¬ 
ment ; for it seems that the work may be completed in four years, that the 
revenue of the tunnel company will suffice to take up the entire amount issued 
in two or three years after its completion, while under the bill reported they are 
made payable in twenty years. 

33. The security offered to the government appears satisfactory and ample, 
for, independently of the millions of treasure which will be extracted hereafter, 
the large bodies of low-grade ores now visible in these mines, which must remain 
until the completion of the tunnel renders their extraction profitable, will give 
an income sufficient for the payment of the bonds. 

34. By demonstrating to the world that our mineral lodes are continuous in 
depth, we absolutely prove that we possess an incalculable stoek of treasure; 
that our wealth is almost unlimited ; that our capacity for paying the national 
debt is beyond doubt; that we have the gold and silver to redeem our paper 
currency, and that repudiation is out of the question; all of which will improve our 
credit abroad, induce capitalists to take our promises to pay at their par value, 
and at a lower rate of interest., thereby directly relieving the people from the 
burdens of taxation. 

35. If we take into consideration the magnitude of this undertaking, the large 
yield of bullion which will be directly secured thereby, the great influence by 
its successful completion upon all our mining districts, the stimulus it will give 
to mining generally, the positive proof it will furnish of our immense mineral 
wealth, and consider the importance of attaining these results, in view of our large 
national debt, ordinary wisdom and foresight should command that the aid 
asked for the construction of this important work, or a much larger sum if it 
were necessary, should be granted, even were no security whatever offered for 
its repayment. 

DELOS R. ASHLEY. 
MORTON C. HUNTER. 
JAMES M. ASHLEY. 
ORANGE FERRIS. 

JOHN F. DRIGGS. 
RUFUS MALLORY. 

Washington, D. O., May 6, 1868. 




























































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